Lease then Buyout - Contract Explanation

[StingaGT]

Just called KMF....in Florida they said the buyout has to be through the dealership...but she did say she has the payoff amount...so what they are saying is not true. Is this just a dishonest ploy to get more money (ie interest)???? That's super irritating, and sad.

I heard florida is one of the state that you need to go through dealership for buyout. I remember seeing that in this tread

 

[Kia99]

Was checking the Kia website for the current lease cash back. Don’t see any numbers just the payment. Where can I see the current lease incentive?

 

[MerlintheMad]

My buyout figure was "behind" another tab that clicked open the buyout page. It isn't displayed front and center. When I go to my KMF page now, I only see the completed amount, so I can't directly answer your question because I don't see what you'd see anymore.

 

[StingaGT]

I received buyout letter from Kia Motor Finance and it says this:

"ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE DISCLAIMED TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW. Your purchase will "

It's written all in caps, just like the way i wrote it.
The way i interpret it is that lease buyout will result in loss of manufacturer's warranty.

I checked with KMF and they said all my manufacturer's warranty will be valid over the phone, but they refused to send me clarification in written format.
I also checked with Kia Motor America and they replied back in email saying all my warranties will be valid after lease buyout
I'm just not sure why they would put such a statement in the letter which can mislead many people and I'm not sure what they are trying to say.
Since, I have written confirmation from Kia Motor America regarding the warranty still being valid after lease buyouy, I will just go ahead and send the check to KMF.

what do you guys think about this?

 

[Rob M]

It's pretty much legal "mumbo-jumbo". The key part of the disclaimer is "permitted by applicable law". There are numerous federal and state laws in the US that prevent them from disclaiming any express or implied warranties that were valid when you took delivery.

 

[MerlintheMad]

Your purchase will ...

… will, what? I didn't read the buyout page, I just wrote the cheque and sent it.

As for the IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, Kia would get out of any claims being made by the buyer if Kia felt that they were unwarranted; and they would disclaim obligation or responsibility to the fullest extent of the law. I think what they are saying is, don't come after us for stupid crap or we'll play the same game back at you to the fullest extent of the law. Some people are sue crazy. You can find examples of "get a lawyer!" on this forum, as a form of advice for things that are unacceptable with the Stinger when it has issues. If Kia can dissuade some buyers from buyout of their leases I'm sure they prefer that. And all they are out is a bit of ink.

 

[pantheman75]

Sorry for the dumb question... my brain isn't very big. What kind of loan is it to buyout a lease? Is that a used car loan? Something else? I'm just trying to shop around rates to see what I'd be looking at. Thanks for your time and help.

 

[robz32]

Depends on the financial entity but most classify it as a used car loan. Also most here have gotten great rates from a credit union.

 

[MerlintheMad]

Sorry for the dumb question... my brain isn't very big. What kind of loan is it to buyout a lease? Is that a used car loan? Something else? I'm just trying to shop around rates to see what I'd be looking at. Thanks for your time and help.

If you can't get a significantly lower interest rate than the rate you're paying to lease your Stinger, don't bother doing the buyout. Obviously a zero interest rate would be excellent; and paying cash to do the buyout would be ideal.

 

[stargtsi]

Sorry for the dumb question... my brain isn't very big. What kind of loan is it to buyout a lease? Is that a used car loan? Something else? I'm just trying to shop around rates to see what I'd be looking at. Thanks for your time and help.

Most Auto loans consider it new as long as the vehicle is a 2019 and under 5k miles

 

[pantheman75]

Question: Are we "pulling something" by doing a lease then buyout of a Stinger? If I walk into a dealership is it a bad thing if I tell them that's what I'm looking to do?

 

[MerlintheMad]

Question: Are we "pulling something" by doing a lease then buyout of a Stinger? If I walk into a dealership is it a bad thing if I tell them that's what I'm looking to do?

I didn't mention it to the dealer because they are not in any way connected to the buyout. But I did ask a Kia rep on the phone what they thought about the buyout, and he said that Kia does not lose money when a buyout option is exercised.

 

[sapper12]

I’ve never considered leasing before and don’t know much about it. I’m only considering it now for the extra rebate and immediate buyout.

How much in lease fees should I expect to pay above the standard tax, title and license? I’m trying to compare total costs between a lease-buyout and a cash purchase.

What should I watch out for on the paperwork? I’m good with numbers, but concerned about not understanding the lease language on the paperwork well enough to make sure I get the agreed upon purchase price. And making sure there isn't anything else problematic hidden in there (additional fees, early termination exclusions, etc.).

 

[MerlintheMad]

I’ve never considered leasing before and don’t know much about it. I’m only considering it now for the extra rebate and immediate buyout.

How much in lease fees should I expect to pay above the standard tax, title and license? I’m trying to compare total costs between a lease-buyout and a cash purchase.

What should I watch out for on the paperwork? I’m good with numbers, but concerned about not understanding the lease language on the paperwork well enough to make sure I get the agreed upon purchase price. And making sure there isn't anything else problematic hidden in there (additional fees, early termination exclusions, etc.).

All I know is that out the door price is what counts; what goes into it doesn't matter; the price out the door has to agree with what you agreed between you and the dealer, or they've pulled shenanigans before asking you to sign the final paperwork. So, if you agree to a specific price, make sure they understand, that you demand, no shenanigans or you won't sign.

Buyout makes sense because the Kia lease incentives are so big. If you finance a loan to do the buyout, it has to at least be equal to the Kia Finance interest rate; which is likely going to be a credit union loan to get down that low. The higher your interest rate above Kia's interest rate, the less advantage there is doing a buyout.

I didn't know about leasing, the buyout or lease rent when I bought my Stinger: this was my first experience with buying a new car. Were I to go in and do it over, I'd talk about final out the door price. When I went in to see if I was going to buy (lease), it was all about feeling right. If at any stage in the negotiations I'd felt manipulated or conned, or the process hit a stall, I'd have walked out. But it went smooth as butter on toast; and the final price was within the range that felt right to me: I wasn't there to demand and win an absolute rock bottom price. After three months I'd joined this form and proceeded to get educated on leasing just enough to be convinced to do the buyout: what made the final decision was the lease rent. The buyout avoids all of that. Read through the thread and you'll find plenty of information about all of this.

Oh, and welcome to the forum, by the way!

 

[Rob M]

Question: Are we "pulling something" by doing a lease then buyout of a Stinger? If I walk into a dealership is it a bad thing if I tell them that's what I'm looking to do?

It shouldn't be. When I leased my Stinger, I explained to the salesperson that I wanted to negotiate a price using their internet sales price (included dealer discount off MSRP and AWD rebate) as a starting point and that I wanted to lease the vehicle to get the $7,900 lease cash (2018 GT2, awd) offered at the time and then quickly proceed to buyout the lease. The salesperson suggested that he hadn't seen this tactic yet, but quickly admitted it made sense since there were no real incentives to do a conventional purchase. The sales and finance managers didn't question my reasoning, but it wasn't evident whether they experienced this routinely. If it were something that Kia was ill prepared to deal with, they would assign greater fees for the early buyout. It may not be their ideal ending to the lease (they'd much prefer 36 months' rent vs. a couple), but they're not losing money. It costs around $1K in lease acquisition and buyout fees, and they can earn a couple % interest on their cash accounts (at least another $1K over the lease term, in theory, by having the principal on the lease up front). How much is the rent cost on the full term of the lease (I don't have the figures in front of me, but likely $3-4K on average). So maybe Kia and/or the lessor stand to make $1-2K less when an early buyout occurs.

 

[Rob M]

I’ve never considered leasing before and don’t know much about it. I’m only considering it now for the extra rebate and immediate buyout.

How much in lease fees should I expect to pay above the standard tax, title and license? I’m trying to compare total costs between a lease-buyout and a cash purchase.

What should I watch out for on the paperwork? I’m good with numbers, but concerned about not understanding the lease language on the paperwork well enough to make sure I get the agreed upon purchase price. And making sure there isn't anything else problematic hidden in there (additional fees, early termination exclusions, etc.).

The standard lease contract should clearly indicate the lease acquisition fee ($650) and the fee to buyout the lease ($300). Those are the two lease-specific fees that I can think of. These fees may vary, but I believe that is what I and some others paid. So right off the top, it costs you roughly $1K to do the buyout (of course, a conventional loan will also come with some kind of upfront acquisition fee as well).

The biggest issue I had with the lease buyout was getting KMF to process my odometer disclosure statement and send me the title. Otherwise, the online request for buyout amount and sending in a check was easy. You didn't list your state in your profile, but be aware in some states (FL, etc.) you have to go through your dealer to initiate the buyout.

One other area to be aware of is on taxes/fees (dependent upon state) that may be applicable once you've completed the buyout. You may have to pay a title fee, registration fees, and be required to get new license plates as well. There may be one or two states that obscenely double tax on sales taxes. I live in MD. Here you pay 6% tax on the agreed upon value of the vehicle (not just the part you are leasing), but when you do the buyout additional excise taxes are waived (another $3K in taxes would have wiped out much of my lease buyout benefit). We pay registration 2 years at a time, so I'll get refunded for the 2nd year of my original registration, but had to pay to reregister and another $100 title fee.

LOL, as lease administrator, Hyundai was also kind enough to forward me a toll booth fine from Delaware. $4 toll, $50 in fines and fees. I have a working EZPass registered in MD; not sure why it didn't read. I sent Delaware a check for $4.

 

[pantheman75]

I'm so confused... I'm looking at a 2019 Kia Stinger GT2 AWD with remote start. MSRP is $53,890. I got a Costco Auto quote from the dealer that put it at $49,556. I inquired about leasing the car to take advantage of the $8,500 lease cash and then wanting to immediately buy it out. They said that wouldn't make sense because because if I pay it off immediately I wouldn't be able to take "full" advantage of the lease cash. Help an idiot out. Good deal? Bad deal? What the hell am I talking about here LOL? The numbers are so confusing.

 

[Rob M]

The person you talked to is either ignorant of what you are attempting to do, or is not being honest. Technically, you are not buying out the lease "immediately". You are entering into a lease agreement for the full term, but with the intent of legitimately ending the contract early by purchasing the vehicle outright and paying a $300 fee per the contract. The lease buyout is not "immediate" because you have to at least wait until your account is established on the KMF website. When you lease, your first payment is included in whatever check you write the dealer at delivery. You may need to make one additional month's lease payment while your account is being established. Once the lease cash is applied, it is part of the capitalized cost reduction in the contract. Net capitalized cost is the negotiated price of the vehicle (includes discounts such as Costco quote) plus any other costs minus any capitalized cost reductions (the $8,500 lease cash in this case). So from the lease perspective, that net cap cost along with the money factor and residual value are what determine the monthly lease payment. However, since a very early buyout is your plan, the money factor and residual value aren't very important.

 

[anselgator]

Hi guys. I'm beyond furious and hope you guys can shed some light. I bought my Stinger in Jan. I did the lease. I want to buyout. Through the dealership's finance guy....who I learned is new to Kia......he gave me a payoff and told me to mail check to KMF. I did. After two weeks of noticing they cashed my check but not zero my balance, I called KMF and they said they cannot accept my check......in Florida you have to buy through dealer. WTF. Ok......2 weeks later when I didn't have my check and Kia said 30 days to get back, I contacted my dealership and talked to a sales mgr hadn't used previously (the other guy was out) and he got me my check back within 24 hours of talking to him. That's a good thing, even though I am dealing with this aggravation. In any case.........

1. They are telling me the new payoff amount is $400 less, even though I just had to make a $600 lease payment. My argument is the dealer's guy screwed up...I shouldn't have to pay this. I did everything as they told me to do. I will fight this. The next one is the kicker.....

2. This sales mgr is telling me when I come to give them the check to buyout in they are basically selling me the car. Title, Tag...wait for it......dealer fees. Umm..what the f did you just say? I told him there is no way I'm paying another $700 (so would be $1400 in dealer fees).

Anyone have this experience? If true, I lost on the 'buy vs lease/buyout'.

 

[Jay B.]

I feel your pain, Colorado is another one that requires lease buyout go through a dealership. I am going to look into a balloon loan instead to not have to deal with the dealership again.